Ferrous Resources still negotiating partnership

DianaKinch

RIO DE JANEIRO (MarketWatch) -- Brazil's Ferrous Resources, an iron ore producer owned by U.S., U.K. and Brazilian investment funds, said Monday it's still negotiating a strategic partnership to develop its iron ore and port resources and the new partner's name may not be announced before year's end.

"We're still in the process of choosing the strategic partner," said a Belo Horizonte-based company spokeswoman. "No deadline's been set for conclusion of the negotiations which involve several interested parties. The percentage the partner will take in the project hasn't been defined."

Ferrous declined to comment on reports out of London over the weekend saying that the world's biggest mining company, BHP Billiton PLC (BBL, BLT.LN), may be preparing a bid worth around $3.2 billion for the Brazilian company. According to the spokeswoman, it's "natural that rumors should occur, but we have to remain calm until the announcement is made so as not to jeopardize the process."

Ferrous, which started producing iron ore earlier this year in Minas Gerais state, southeast Brazil, plans to produce 25 million metric tons a year of the steelmaking ingredient by 2016, later raising output to more than 60 million tons a year, for both export and domestic markets. The company is building a port in Espirito Santo state.

Ferrous hired Deutsche Bank last year to speed a search for a strategic partner and raise cash for the mine and port development plans after axing initial plans for an initial public offering in London due to market volatility.

Ferrous' chief executive officer, Mozart Litwinski, said at that time the strategic partnership might be announced in April or May.

The apparent delay in concluding the talks on the partnership are not due to the new wave of market turbulence but to the large number of parties interested in taking a stake in Ferrous, according to the spokeswoman.

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